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California Wines Fuel $1.49 Billion in U.S. Wine Exports in 2014

Screen Shot 2014-09-23 at 7.41.51 AMFeb 25, 2015

SAN FRANCISCO — U.S. wine exports, 90% from California, reached $1.49 billion in winery revenues in 2014, the second highest dollar value for U.S. wine exports and a 64% increase from five years ago. Challenged by a strong dollar and the West Coast port slowdown that began last July, U.S. wine exports were slightly down compared to the previous year while volume was up to 442.7 million liters or 49.2 million cases.

“With three back-to-back California vintages (2012, 2013 and 2014) heralded for their high quality and size, we have the ability to meet consumer demand for our wines both in the U.S. and abroad,” said Wine Institute President and CEO Robert P. (Bobby) Koch. “Despite our strong dollar and heavily subsidized foreign competition and their high tariffs, consumers worldwide are attracted to all things California—our iconic lifestyle, scenic landscapes, great wine and food, and emphasis on environmental stewardship.”

Of the top 10 export markets for California wines, the European Union’s 28-member countries were the largest accounting for $518 million; followed by Canada, $487 million; Japan, $88 million; China, $71 million; Hong Kong, $69 million; Mexico, $24 million; South Korea, $22.2 million; Nigeria, $21.9 million; Vietnam, $20 million; and Singapore, $16 million.

“Wine Institute’s global branding campaigns for California wine help develop markets in more than 25 countries with 15 representative offices around the world to provide market information and promotional assistance,” said Wine Institute Vice President International Marketing Linsey Gallagher. “We introduced several new tools this year including the translation of our consumer website discovercaliforniawines.com into eight languages, social media campaigns now live in 16 countries (Facebook, Twitter and Weibo and WeChat in China), an educational California Wines PowerPoint tool, and a strong partnership with Visit California to increase tourism to California wine regions. We organize California’s participation in international trade shows and trade missions to key export markets, host retail and on-premise tastings for trade, media and consumers worldwide and have an active schedule of California wine country visits by international media and wine buyers.”

“Wine Institute continues to work closely with Members of Congress and the Administration to remove trade barriers and provide a level playing field for our vintners around the world. First and foremost, Congress needs to approve Trade Promotion Authority (“fast track”) legislation so that the tariffs U.S. wines face in key Asia-Pacific and European markets can be eliminated in the Trans-Pacific Partnership and Transatlantic Trade & Investment Partnership free trade negotiations,” said Tom LaFaille, Wine Institute Vice President and International Trade Counsel.

Five of Wine Institute’s 15 Regional Trade Directors reported on key markets as follows:

Canada
“California wine sales experienced strong growth in all the major markets across Canada during 2014. Retail sales of U.S. wines now exceed a record six million cases and $1 billion dollars with the strongest increases in the provinces of Quebec and Alberta,” according to Rick Slomka, Wine Institute Trade Director for Canada. “Canadian consumers have confidence in the quality and value offered by California and our wines are successful in all price segments. In-store promotions in the major markets have created a solid base and strong momentum for California wines, which will be needed to offset the challenges of a stronger U.S. dollar.”

Continental Europe
“Exports to continental Europe were down slightly, mainly as a result of a weakening of the Euro in the fourth quarter. The 2015 year will also be challenging, with the markets adapting to the exchange rate of the stronger U.S. dollar,” said Paul Molleman, Wine Institute Trade Director for Continental Europe. “The 28-member European Union countries accounted for 35% share of total U.S. wine exports in 2014.”

United Kingdom
“The UK economy is now more robust than at any time in the last 10 years, but a series of above-inflation duty increases has taken its toll on the sales of wines at popular prices. However, consumer wine drinking behavior is changing to a less-but-better approach, and premium wines priced at $15 and over have increased by 30%. Premium California wine is well set for further growth here,” said Wine Institute United Kingdom Trade Director John McLaren.

Japan
“While California wine sales in Japan are brisk, supply from California has been a major challenge due to slow shipments from the state’s West Coast ports. Japanese import statistics confirm that U.S. wine exports to Japan in 2014 were bigger than a year ago for the period up to November but became negative in December. Resolution of the port issue should bring supply back in line with growing demand,” said Ken-ichi Hori, Japan Trade Director for Wine Institute.

“Once the Trans-Pacific Partnership free trade agreement is finalized, the import duty on U.S. wines will likely be minimized and help the entire California category increase in Japan. This is critical for the California wine industry, since our competitors from Chile and Australia have already established Free Trade Agreements with Japan, and thus have a duty advantage over California wines.”

China and Emerging Markets
“Asia’s emerging wine markets remained buoyant in 2014 despite the negative impact of China’s ongoing austerity campaign, resulting declines in the value of California wine exports to China and Hong Kong. However the long-term outlook for these key markets remains very promising and all of our other active Asian emerging markets saw value gains in 2014, led by Vietnam, up 55%, Singapore, up 33% and Taiwan, up 31%,” said Eric Pope, Wine Institute’s Regional Director, Emerging Markets. “Our markets in the Americas also showed resurgent growth, led by Brazil, up 44% and Mexico, up 14%. The value of California wine exports to Colombia, our newest Export Program market, grew 6%. Since 2011, the value of wine exports to this market has doubled.”

Since 1985, Wine Institute has served as the administrator of the Market Access Program, a cost-share export promotion program managed by the USDA’s Foreign Agricultural Service. More than 170 wineries participate in Wine Institute’s California Wine Export Program and export to 125 countries.

 

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